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CMS Proposes New Limits on State Directed Payments

The following communication is from the National Council for Mental Wellbeing:

Yesterday, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule, Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments, implementing provisions of H.R.1 to establish new limits on certain Medicaid managed care State directed payments (SDPs). Additional information on the proposal can be found in the press release and fact sheet.

In alignment with H.R.1, total SDP rates are capped at 100% of Medicare in expansion states and 110% in non-expansion states for inpatient hospital services, outpatient hospital services, nursing facility services and qualified practitioner services at an academic medical center.

Where a Medicare benchmark is unavailable, the payment limit would be 100% of the state-plan-approved rate.

However, most significantly, the proposed rule would extend the SDP limits beyond the four original services under H.R.1 (listed above) to all SDPs, regardless of service type, in all states, Washington, D.C., and all territories beginning Jan. 1, 2029. The proposed rule would also apply similar limits to certain targeted Medicaid fee-for-service payments.

This would include behavioral health SDPs and could lead to significant disruption in 2029.

Additional provisions in the proposed rule include proposals to:

  • Eliminate uniform increase SDPs as a permissible type of SDP for rating periods beginning on or after Jan. 1, 2028, with a limited exception for grandfathered SDPs.
  • Permit states to adopt minimum or maximum fee schedules that are no greater than the applicable payment rate limit without CMS prior approval for rating periods beginning on or after Jan. 1, 2028.
  • Establish new claims-level compliance and reporting requirements, including submission of provider-specific (NPI-level) data, identification of applicable benchmark rates, and documentation of controls to ensure that each individual service payment does not exceed the cap.
  • Introduce new reconciliation requirements for value-based payment SDPs, requiring states to demonstrate post-period compliance with the cap at the service level.
  • The rule specifies that payments exceeding the cap constitute Medicaid overpayments subject to recovery and reporting requirements, explicitly linking SDP limits to existing overpayment regulations.

The rule is set to be formally published in the Federal Register on May 22, with a 60-day comment period following its publication.

The National Council will continue to further review this proposal, provide you with timely updates, and will plan to submit comments on this rule. We are here to support you every step of the way through these changes. For additional information on H.R.1, please visit the National Council’s H.R.1 Hub. If you have any questions, please reach out to [email protected].

 

Governor DeWine Signs Executive Order Approving Emergency Rules on Medicaid Provider Revalidation

Ohio Governor Mike DeWine today (5/18/26) signed Executive Order 2026-01D to allow the Ohio Department of Medicaid (ODM) to implement emergency rules to require more frequent revalidation of providers being identified as higher-risk for committing fraud.  

Since Governor DeWine's direct oversight of the Medicaid Fraud Control Unit investigations, prosecutions, and referrals began in 2011 during his time as attorney general and continuing under his leadership overseeing Medicaid's comprehensive work to fight fraud as governor, the State of Ohio  has been responsible for more than 2,300 Medicaid fraud indictments, secured 2,200 criminal convictions, and recovered more than $644 million in fraudulent Medicaid payments. 

Governor DeWine announced new Medicaid fraud prevention initiatives last week that strengthen and build upon long-standing efforts to fight fraud, waste, and abuse in the Ohio Medicaid system. Additionally, Governor DeWine sent a letter to Center of Medicare and Medicaid Services (CMS) on May 1 committing Ohio to partnering with the Trump Administration and using a more stringent revalidation process to better prevent fraud.

Today's executive order implements emergency rules announced last week.

Under the authority of Ohio Revised Code Sections 5164.02. 5164.32, 5164.33, ODM will immediately amend Ohio Administrative Code rules to:

(1) permit Ohio Medicaid to terminate the provider agreements of Medicaid providers that have not provided Medicaid services or billed the Medicaid program in more than one year,

(2) require Medicaid providers that are at a higher risk for committing fraud to revalidate enrollment more frequently to confirm compliance with Medicaid program rules,

(3) allow Ohio Medicaid to require certain Medicaid providers to recredential as determined necessary by the Medicaid Director, and

(4) permit the denial of a provider enrollment application when a federally approved moratorium is in effect, even if the enrollment application was received but not approved before the moratorium began.

 

What’s Driving 3 Consecutive Years of Decline in National Drug Overdoses

Drug overdose deaths fell for a third consecutive year in 2025, down by 13.9%. It’s the first time the fatal overdoses have dipped to pre-pandemic levels, according to data from the Centers for Disease Control and Prevention.

Dr. Eric Arzubi, CEO and founder of Frontier Psychiatry, suspects the drivers of the decline is a combination of the elimination of the federal X-waiver requirement for buprenorphine treatment, growing naloxone distribution and access, harm reduction practices, and heightened social awareness.

While the three years of consecutive decline in drug overdose deaths is positive news for the addiction treatment industry, Shatterproof, a national nonprofit organization that focuses on addiction care and advocacy work, called the progress “fragile” in a statement.

 

Psilocybin for Cocaine Use Disorder

This first randomized, quadruple-blind clinical trial of psilocybin for cocaine use disorder found that a single psilocybin dose combined with manualized psychotherapy produced more cocaine‑abstinent days, higher rates of complete abstinence, and fewer lapses over 180 days than active placebo plus psychotherapy. These early findings suggest psilocybin may hold promise as a novel treatment approach for cocaine use disorder.

 

ONDCP Releases the 2026 National Drug Control Strategy

The Office of National Drug Control Policy published the National Drug Control Strategy for 2026, outlining demand‑side actions to expand evidence‑based prevention, treatment and recovery supports.

It calls for scaling primary prevention for youth, integrating addiction treatment and early intervention into health care, and strengthening peer recovery services and recovery ready workplaces alongside intensified supply‑side and enforcement efforts.

 
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